ABA State Associations Urge Banking Agencies to Adopt Durable Tailored CRA Framework

WASHINGTON — The American Bankers Association joined state bankers associations from across the country in submitting a comment letter to the Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation today on their proposed revisions to Community Reinvestment Act regulations. The letter urges the agencies to adopt a framework that remains faithful to the statute, reduces unnecessary regulatory burden and reflects the diversity of the banking industry. They also urged the OCC and the FDIC to coordinate with the Federal Reserve to develop a unified CRA rule.

In the letter, the associations noted that for nearly five decades, CRA lending and investment have supported economic growth and opportunity, with banks providing roughly $340 billion in capital to low- and moderate-income communities in 2024 alone. The associations expressed support for the agencies’ efforts to update the regulations but emphasized that any final rule should provide long-term regulatory certainty, appropriately tailor requirements to different types of institutions, and preserve flexibility for community banks and specialized business models.

“Banks, regulators, customers and communities are best served by a stable regulatory framework,” the associations wrote. “To that end, the agencies should strive to finalize a rule that is grounded in the statute and will withstand changes in political administration.”

Among other recommendations, the associations expressed strong support for the agencies’ proposal to increase the asset thresholds for Small and Intermediate Banks to $1 billion and $10 billion, respectively, and index those thresholds to Gross Domestic Product. This change would realign the distribution of institutions subject to these classifications with the agencies’ 1995 vision for tailored CRA evaluations and its adjustment in 2005, which is consistent with the regulators’ goal of reducing compliance burden.

“Allowing more institutions to qualify for the Intermediate Bank test would not eliminate the community development responsibilities of these institutions. Unlike the Large Bank test, which requires banks to fill separate ‘buckets’ of community development lending and investments, the Intermediate Bank test evaluates those activities on a combined basis. As a result, rightsizing the asset cap for Intermediate Banks would reduce burden on these banks to fill each bucket and allow more institutions to determine the appropriate mix of community development loans and investments based on the needs of the communities they serve. This is consistent with the agencies’ goal when they established the Intermediate Small Bank classification—to provide flexibility to institutions in how they serve community credit needs.”

The associations added that, “The argument that banks will reduce community development investment activity because they are no longer required to fill a separate investment bucket presumes that regulators, not local banks, should determine the optimal mix of community development activities.”

The associations also recommended the agencies preserve strategic plans and wholesale and limited purpose bank designations, focus retail lending evaluations on material lending activity, and refine the community development framework to provide greater certainty and flexibility.

“The agencies should use this opportunity to adopt a framework that will be long-lasting,” the associations concluded. “A final rule is most likely to stand the test of time if it remains faithful to the CRA statute, reflects interagency consensus, relies on transparent and well-supported standards, and provides flexibility for diverse bank business models.”

Read the full comment letter.

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The American Bankers Association is the voice of the nation’s $26.5 trillion banking industry, which is composed of small, regional and large banks that together employ over 2 million people, safeguard $20.7 trillion in deposits and extend $13.9 trillion in loans.

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ABA, State Associations Urge Banking Agencies to Adopt Durable, Tailored CRA Framework

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